"The target that I've given to my ministry goes back to those long term affordability measures - which is the ratio of incomes to house prices. That’s what really matters. Historically that number's been about four for New Zealand," Smith said.

"Currently in Auckland it's seven. I've set that long term objective of getting it back to four. That means incomes are growing faster than house prices and you need that repeatedly over a period of a decade or two to get those ratios down," he said.

The REINZ Median House price for Auckland was a record high NZ$637,000 in March, implying an household income of about NZ$91,000 if the multiple was seven as stated by the Minister.

To get that multiple back to four would imply house prices remaining flat in Auckland for 19 years with average annual wages growth of 3%, as is currently the case. Or it would imply house prices dropping 43% for the multiple to be rectified.

Earlier Smith agreed that annual house price inflation in Auckland of 14% was not sustainable, but that actions by the Government on supply and the Reserve Bank on demand (higher interest rates and high LVR speed limits) had slowed house price inflation to around 2-3% in the last quarter.

REINZ's stratified house price index for Auckland showed house prices rose 4.8% in the last three months to March and were up 12.1% from a year ago.

"You need to take into account, the Government's Housing Accord came into effect in October. The LVR limits from the Reserve Bank only bit in November, and so what you really need to say, are the steps that this government has taken and what the Reserve Bank is taking, are they having an effect? The answer is yes," Smith said.

"If your argument is that there is more to do? Absolutely, there’ll be more in the Budget," he said.

Smith was then asked if it would take 20 years to rectify the problem of housing affordability.

"If you look at housing ownership in New Zealand, it's been going backwards every single year since 1987. In other words the decline in home ownership from about 75% in New Zealand back to about 65% has occurred over that period," Smith said.

"And if you're looking for some instant magic bullet that the government can wave and change those 20 year trends you're mistaken. It's about doing the hard yards in those important areas I've identified," he said, referring to the Productivity Commission's study on housing affordability and its recommendations for improvements in land supply, building materials costs, council infrastructure costs, productivity and compliance costs.

Meanwhile, Labour Leader David Cunliffe reiterated in a Q+A interview that Labour planned to impose a 15% capital gains tax on investment property and to ban non-residents from buying New Zealand homes. He also said Labour would repeal National's plan for reviewable tenancies for State Houses, which starts on July 1. He reiterated Labour's Kiwibuild plan to build 100,000 affordable homes over 10 years.

"The affordability crisis in housing is the number one problem that presents at my electorate office, and every week we have families coming through. We've got families crowded two or three families into one house. We've had people living in garages, people living in cars. It's disgusting. Increase supply first off, and it's obvious. That’s why we've got KiwiBuild, a hundred thousand new homes in 10 years, and even that won’t be enough, but it's a jolly good start," Cunliffe said.

He said New Zealand should have a capital gains tax on investment property, as other countries such as Australia do.

"Why would wage and salary earners be taxed on every dollar they earn, but property speculators get tax free capital gain. It's lunacy. I'm comfortable with that because speculators are driving this market, and to make matters worse, according to the BNZ and Real Estate Institute about 12% of speculative house buyers, all house buyers last year in Auckland came from non-resident foreigners," he said.

"Non-resident foreigners who have access to cheap finance are driving up the price of homes in New Zealand, so young Kiwis can't get into their own homes," he said.

Cunliffe rejected the Government's argument that a capital gains tax and foreign buying limit had not worked in Australia, where prices rose almost 10% lasst year.

"Their (Australia's) problem would be worse if they didn’t have it. Nobody's saying it's a complete solution. You’ve got to have housing supply, you’ve got to have a decent state and community housing sector for those who are just vulnerable and will not be able to get into the private market. You’ve got to take the heat out of the property roller coaster, capital gains tax and restrictions on non- resident buyers," Cunliffe said.

"We're not talking about crashing house prices, there is no way that house prices are going to crash. Middle New Zealand does not have to worry about that. But what we don’t want – what I don’t want – I've got one home – I don’t want to see the value of it crash, but I don’t want my two sons locked out of the market when they come to need a home, because some banker in some foreign country's playing our market for all it's worth, or because we've got a ridiculous tax structure which is providing an effective tax subsidy for landlords so owner occupiers can't compete," he said.

"It's ridiculous, and it's so easy to fix, and we will fix it, and I tell you what. Housing is going to be one of the crucial issues in this year's election. If Nick Smith and the National Party don’t think we're going to be coming after them – this is disgusting and it's going to change."

Cunliffe also said Labour would be announcing more housing policy soon.

"Those who buy and sell property are already taxed on the income from this activity. Kiwi landlords are not property speculators." he said.

“They are ordinary Kiwis offering a service to people who want somewhere to live, but don't always want to invest in bricks and mortar".

"There are hundreds of thousands of mum and dad landlords in New Zealand. They are incorrectly being blamed for high house prices. The Labour Party is sorely mistaken if they think a capital gains tax is the solution to New Zealand's housing woes," he said.

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ZZ - fully agree.....it shows the depth of desperation in Labour.....Cunliffe is prepared to use what should really be termed as propaganda to try and secure votes.

Speculators are already paying taxes on profits and the IRD has been enforcing this with vigour. The IRD got extra funding to chase anyone who has not been complying and they have achieved a good sized haul from their efforts.

Selfserving drivel from NZ Property Investors' Federation, the lure of a capital gain is what most so called 'investors' in the rental game for. I've yet to come across a landlord who actually 'invested' in their rental property. Property Investment is an oxymoron. Of course these speculators need to be taxed, and come clean about the motivation for providing their 'service'.

Nonsense. Every landlord invests in their rental property. That's what investment is -expenditure of time, effort, money in hope of future benefit (with risk elements usually reflecting return). Whether the benefit is lure of taxed rental income or lure of taxed capital gain (for speculators) doesn't change the definition of investment.

What you are complaining about is that in your experience maintainence and/or capital improvements aren't made to your satisfaction - in which case you can just move.

Sitting on a property and hoping for a windfall capital gain is hardly investment, its speculating. How is that 'investing' anything but hot air. It doesn't even end in anything actually being made. Its speculation, pure and simple.

Buying a property with expectation of future capital gain based on analysis of fundementals like housing shortages is the very definition of investment. Look up definition of speculation - "the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of a tradable good such as a financial instrument, rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, interest, or dividends."

David Cunliffe is talking up a capital gains tax. Does everyone here realise that CGT will apply to everything? Not just property. Like mum and dad investors selling shares; or selling the family business.

Noponies you are quite wrong.
I have invested in property long term for several simple reasons.
(1) To have total control over my investments and not have the fear that i will wake up some morning and find it them gone . Nothing like bricks and mortar that can be touched and felt.
( just ask those who invested in finance companies)
(2) To provide a passive income to supplement the pathetic Superannuation payments in my retirement.
(3) To fill a need in the market for which there is a demand and which is hard to resist.
(4) Any capital gain is welcome, but illusory as any gain will be needed just to buy back into the market.
This is my view and the view of most of the other investors I know. Pure speculators are rarer than you think and taxed at the full rate anyway. If they are not then they should be.

Its certainly been my experience. The only 'investement' I've come across was when I was renting in London, where the rental agency actually came around and did electrical safetly audits and preemptivily maintained the property. In NZ nothing of the sort, just Mum n Dads twiddling their thumbs waiting on that capital gain.
Have you built your rental properties from scratch? If not, then I think you are doing a dis-service to the housing market.

Let's get this straight. Historically, for many decades now, house prices have roughly doubled every ten years. But Mr Smith is implying they will now remain flat for roughly two decades! What am I missing? Has Mr Smith lost his mind?

A capital gains tax will simply shift the distribution towards house ownership and away from rentals with rental prices rising relatively due to the decreased supply. The same for the LVR.
Housing prices are all about the supply, demand, the cost of money.
Given the artificially low interest rates worldwide there is only a limited amount the RBNZ can do rasing interest rates without pushing the NZD through the roof.
The NZ Government needs to add the seaonally adjusted immigration rate to the RBNZ tool kit & allow the RBNZ to set the number of points migrants need to enter NZ. NZ is a small country and needs to manage the flow rate into the country so that the market has sufficient time to respond. If the immigration rate is to be managed then similar controls should also be implemented on the rate of foreign purchasing of houses.

LOL Smiths on another planet - again! 20 years, what a joke. Boy National have dropped the ball on this one.
For gods sake get some one in who can sort this simple housing issue out, so we can meet our peoples needs and move on.
Why does greed take precedence over peoples needs.
Cunliffe is on to a vote winner here, if he plays his cards right.
Speculation needs to be reigned in and building cost reduce. Land supply, Council, material and labour.

"Speculation needs to be reigned in" - really? How much of Aucklands housing stock has been produced as a result of speculation? All the Villas in Grey Lynn through Westmere to the bungalows in Pt Chev were builder spec houses for starters.

Not nearly enough affordable spec housing has been built.
Thats the issues this and the news has been reporting, where have you been bob?
The speculation reffered to is the artifical constrained supply; easy cheap money; manipulative hype, competing in a world market and investor tax breaks thats driving prices beyond what a locals can afford.

"Artifical constrained supply; easy cheap money; manipulative hype, competing in a world market and investor tax breaks" are not speculation. You could speculate or invest in property based on your assesment of the effects of these, but they are not 'speculation'. I can't go out and buy myself a "investor tax break" and hope the "investor tax break" market moves in my favour so I can profit by selling my "investor tax break"

Builders building a house to sell on is not "speculation". Sure they are speculating that they can sell the house for more than it cost to build, but that's the same as any business. Speculators don't produce anything.

So someone that engages in 'speculation' and 'speculates' is not a 'speculator'?

It's just semantics really - an investor is just a lower risk longer term speculator. Point is that speculation/investing (expending time. effort and money) in the hope of future gain is what actually drives most housing supply - and certainly the most affordable housing supply.

Complaining there's not enough housing and then deciding the solution is to stop the people/process that supply houses is absurd.

You're joking Brendon, "Cunliffe smashed Smith" ? Having just been shown how it's doesn't work, Cunliffe just reiterated the same tired rhetoric that It will be different this time with Labour. His performance on Q&A is the exact reason people are turning off him, and Labour who elected him.

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